Commercial Litigation and Arbitration

When Emails Constitute Business Records — Absence of Testimony from Sender Not Preclusive

Penberg v. HealthBridge Mgmt., 2011 U.S. Dist. LEXIS 119564 (E.D.N.Y. Oct. 17, 2011):

b. Internet Leak

HealthBridge's second basis for alleging a breach of fiduciary duty is based on the assertion that confidential HealthBridge documents were leaked onto the internet through a file-sharing program, Lime Wire, that was installed on plaintiff's home computer. In support of this argument, HealthBridge contends that it has obtained an opinion from an independent computer forensics expert who has opined that certain confidential HealthBridge information was leaked from plaintiff's home computer onto the internet.... The expert also allegedly confirmed that plaintiff deleted or destroyed certain documents which had been maintained on his computer in violation of company policy.

Plaintiff denies the claim that confidential information was leaked onto the internet in breach of his fiduciary duty. He contends that a HealthBridge employee informed him that despite the claim that the documents had been leaked through Lime Wire, the employee allegedly looked at the program before deleting it and determined that "it did not show that it had exported any of plaintiff's HealthBridge files." *** Furthermore, plaintiff challenges the admissibility of the evidence that defendant has proffered in support of the claim that information was leaked onto the internet. Specifically, plaintiff contends that the only evidence presented by defendant is an email from Rian Wroblewski of the 'Red Team"..., Mr. Wroblewski's testimony with respect to what was found by the Red Team is not available because he has failed to comply with Court orders to appear for deposition. Therefore, plaintiff contends that Wroblewski's email is inadmissible hearsay under the Federal Rules of Evidence***.

Defendant argues that the Red Team email is admissible under the state of mind hearsay exception and the business records hearsay exception to the hearsay rule.... The email at issue is entitled "[SPAM] Health Bridge P2P Exposure," and it reads as follows: "Attached you will find a screen capture with IP address and total files shared, in addition to a txt [sic] file containing the titles of all files in the shared folder. I am also attaching a few sample documents." ... This email and attachments were received after counsel for defendant had a conversation with Mr. Wroblewski....

Federal Rule of Evidence 803(6) provides an exception to the hearsay rule for:

A memorandum, report, record, or data compilation in any form, of acts [or] events . . . made at or near the lime by, or from information transmitted by, a person with knowledge, if kept in the regular course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of the information or the method or circumstances of preparation indicate lack of trustworthiness.

According to the Second Circuit, "admissibility under Rule 803(6) requires both that a memorandum have been 'kept in the course of a regularly conducted business activity' and also that it was the 'regular practice of that business activity to make the memorandum....'" United States v Freidin, 849 F.2d 716, 719-20 (2d Cir. 1988) (quoting Rule 803(6)). These two elements "must be shown by the 'testimony of the custodian or other qualified witness' of the record. Finally, even if it meets these requirements, the memorandum cannot be admitted if the 'source of information or the method or circumstances of preparation indicate lack of trustworthiness," Id. See also Phoenix Assoc. I[] v. Stone, 60 F.3d 95, 101 (2d Cir. 1995),

"Courts have held that conventional letters, memos, or notes are admissible under the business records exception if they are regularly made in furtherance of the employer's needs and not for the personal purposes of the employee who made them." Canatxx Gas Storage Ltd. v. Silverhawk Capital Partners. LLC, Civil Action No. H-06-1330, 2008 WL 1999234, at *12 (S.D.Tex. May 8, 2008).

Courts have applied a similar approach to emails. A party seeking to introduce an email made by an employee about a business matter under the hearsay exception under Rule 803(6) must show that the employer imposed a business duty to make and maintain such a record. Courts examine whether it was the business duty of an employee to make and maintain emails as part of his job duties and whether the employee routinely sent or received and maintained the emails.

Id. In determining whether an email constituted a business record, the court in Canatxx reviewed an affidavit from the principal of the company stating that an email he had prepared recounting his phone conversation directing defendant to stop work on a deal was a document made in the course of the company's regular business activity. That representation, coupled with the statement that it was the company's regular practice to keep these records, was found by the court to satisfy Rule 803(6). Id. at * 13. See also Directly. Inc. v. Murray, 307 F, Supp. 2d 764, 772-73 (D.S.C. 2004) (admitting email sales records when orders were routinely placed via email and the emails were retained as business records); Piere v. RBC Liberty Life Ins., Civil Action No. 05-1042-C, 2007 WL 2071829, at *2 (M.D. La. July 13, 2007) (finding that emails fell within Rule 803(6) because they were prepared by employees "during the ordinary course of business"); but cf., New York v. Microsoft, No. CIV A. 93-1233(CKK), 2002 WL 649951, at *2 (D.D.C, Apr. 12, 2002) (refusing to admit emails under the business records hearsay exception due to a "complete lack of information regarding the practice of composition and maintenance of" the emails); United States v. Ferber, 966 F. Supp, 90, 98 (D. Mass. 1997) (finding that emails submitted by the government did not fall under the business records exception because there was not sufficient evidence that [the employer] required such records to be maintained").

Although in this case, the person actually preparing the email, Mr. Wroblewski, has not testified regarding the preparation of the email, defendant contends that the Second Circuit has taken a liberal approach to the admissibility of business records. (Def.'s Opp. at 16-17), Citing The Retirement Plan of the Unite Here Nat'l Retirement Fund v. Kombassan Holding. A.S., 629 F.3d 282, 289 (2d Cir. 2010), defendant claims that there is no requirement that the person who actually created the record testify, so long as it is the regular practice of the business entity to receive information from that person. (Def.'s Mem, at 16-17 (citing Id.)). See also In re Enron Creditors Recovery Corp., 378 B.R. 54, 57-58 (S.D.N.Y. 2007). Defendant asserts that the testimony of Anthony Stumiolo, CEO of Tony Joseph and Sons Investigation, of which Red Team Protection is a division, supports the defendant's claim that this email is admissible as a business record.... Specifically, Mr. Stumiolo testified that Mr. Wroblewski handled the Red Team in February 2009, at or near the time the email was sent, and that part of Mr. Wroblewski's job was to perform internet searches to obtain confidential information about companies and individuals. *** Mr. Stumiolo further testified that as part of this responsibility, Mr. Wroblewski would notify the affected company or individual about the information discovered.... Stumiolo also testified that the information Wroblewski obtained regarding Health Bridge contained in the email was of the sort he would bring to Stumiolo's attention, though Stumiolo could not specifically recall having a conversation with Wroblewski about what he had found in this case....

Plaintiff argues that Mr. Stumiolo's testimony does not lay die foundation necessary to support the business record exception because Mr. Stumiolo could not say whether Exhibit K was the email Mr. Wroblewski sent or that the email address in Exhibit K is the address from which Mr. Wroblewski conducted his business.... However, on redirect. Mr. Stumiolo confirmed that the email address listed in Exhibit K was in fact the email address from which Mr. Wroblewski conducted his business for Red Team Protection.... According To Mr. Sturniolo, Mr. Wroblewski worked off of his personal computer, rather than a computer provided by Red Team Protection....

In addition, plaintiff argues that Sturniolo did not recall if the information found by Wroblewski had been described to him and that he had not seen any of the specific documents and did not recall having any conversations with Mr. Wroblewski regarding HealthBridge after directing him to send the email.***

Upon consideration of Mr. Sturmolo's deposition testimony, the Court finds that Mr. Sturniolo's testimony is sufficient to lay the foundation for introduction of the email as a business record for purposes of this motion. Sturniolo indicated that it was the regular business practice of Red Team Protection for Mr. Wroblewski to share the type of information contained in the email with Sturniolo and that it was their regular business practice and Mr. Wroblewski's duty to email clients with information such as that included in the email.... Given that the email will likely be admissible at trial, it raises enough issues of fact regarding whether plaintiff leaked confidential information on the internet to render summary judgment inappropriate at this stage.

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